I recently bought a cheap HD camcorder and am generally pleased with what it delivers. Direct connection to a full HD TV gives excellent results except for somewhat weak audio,

I was very surprised to find that having copied the clips from the SD card via a card reader that I could then edit these on my old Premiere Elements 2 SW. The clips are 1080p x1440 and are seen as .mp4 files.

However when I add these clips as media in Premiere the displayed aspect ratio (onscreen and in the thumbnails) is 21:9. so everything is squashed top to bottom. If I go to interpret footage it says:-

Use aspect ratio from file -HD Anamorphic 1080 (1.333)

If I then change this to Conform to - Square pixels (1.0) Then everything looks fine. Also then a subsequently produced (SD) DVD plays back a 16:9 picture.

Previuosly SD anamorphic material was compressed left to right not top to bottom?

I am a bit confused as to whats happening here - can any one clarify this for me.?

So it is this camera: Hitachi DZ-HV565E High Definition (1080p) SD Video Camera .... PRE has many problems with clips produced by these new breeds of mini-camcorders, often because the manufacturer's play fast and loose with their use of the and standards. Generally you will have more success by converting your footage before loading into PRE.

These articles will give you some useful information (the Flip article discusses Hi-Def MP4):

Note that the codec being used is from 'Ambarella' and from the Ambrella website:

Ambarella’s No Compromise on H.264 Main/High Profile

MPEG-2-based high definition video is compressed on HDV tape at the rate of 25 Mbps. For the hybrid digital camera/camcorder device, the compression challenge is how to store high quality high definition video on flash memory-and archive the content on a PC or a hard drive. Nothing but a compression gain of 2.5x over MPEG-2 allows for the recording of one hour of high-quality digital HD on a 4GB flash memory.

Compression Quality

In order to meet this challenge, Ambarella had to depart from the “MPEG-2-like” approach to H.264 compression where the compression strategy is essentially MPEG-2 with an H.264 syntax. Instead, Ambarella has thoroughly implemented all the features that make H.264 a more powerful compression technique.

I don't pretend to understand much of this but I think that phrase "Ambarella had to depart from the “MPEG-2-like” approach to H.264 compression where the compression strategy is essentially MPEG-2 with an H.264 syntax." may be what trips up PRE.

From their conclusion:

Conclusion

Ambarella has factored in the trade-offs between high quality video compression and low power requirements of a portable device to develop the first HD H.264 SoC that compromises neither.

The inference here "develop the first HD H.264 SoC" is that Ambarella have developed a unique codec for their camera. Unfortunately PRE works best with standard codecs. These modern highly compressed formats trip it up most of the time.

So, in conclusion, I think you will get best results with your camcorder if you convert the clip before importing to PRE (see previous links).

You are probably right. I have just started to convert the .mp4 files to DV.avi

However as my original "test" project gave no problems I was disappointed in that firstly the aspect ratio of the .avi had reverted to anamorphic 4:3 (i.e. tall thin people!)* bur more alarming also contrary to my initial trials about 50% of the sound track was muted or had disappeared

*I have S/W to turn the w/s flag on or off in a disc image before burning.

BTW your link to the camcorder is great - however I paid about half the price mentioned on there!